America’s housing crisis rattles families in historic suburb as property prices hit ‘sobering’ level… and here is why it is only going to get worse
House prices will only rise, experts warn. Boston will be the next city where buyers will need $1 million for an average family home.
A perfect storm of rising construction costs, desperate buyers and existing owners locked in their homes has caused home prices in 68 of America’s 100 largest cities to double in less than a decade.
The median sales price for a single-family home reached a record $950,000 in Greater Boston last month, and local real estate agents have said it will likely reach seven figures this summer.
βI don’t think there is a clearer signal to the legislature that they need to work on all fronts to alleviate these price pressures,β said Luc Schuster of The Boston Foundation.
“There’s no question this is a crisis.”
It now takes $1 million to buy this average single-family home in East Boston
And a whopping $1.2 million is needed for this four-story home with a semi-finished basement and a small backyard in suburban Brighton.
The average interest rate on a 30-year fixed-rate mortgage is now seven percent β ββthe highest level in 23 years β as policymakers try to squeeze inflation out of the economy.
High interest rates traditionally have a negative impact on home prices as buyers consider the cost of mortgage payments.
But Jared Wilk of the Greater Boston Association of Realtors warned that a decade of ultra-low interest rates has left existing homeowners unwilling to move and take out new mortgages at the much higher rates.
And that has left buyers desperately competing for the few homes that come onto the market, with more than a third of homes paid for in cash.
The White House has announced plans to give $25,000 to first-generation homebuyers as a down payment.
But those who can’t pay cash still have to find nearly $200,000 just for the down payment on a $1 million home.
βThe reality is that as interest rates rise or fall, as more or fewer homes come onto the market, prices will rise,β Wilk told the newspaper. Boston sphere.
‘There is a lot of demand and there is an imbalance in supply, which means that demand continues to rise.’
Professor Adam Guren of Boston University (left) has said that only an unlikely increase in output is likely to reduce rising prices, while Luc Schuster of the Boston Foundation (right) has warned that high prices will continue to erode local communities.
Construction of new homes has recovered after a dip during the pandemic, but with rising construction costs, new supply has done little to lower prices.
Home sales in Boston fell every month for almost two years as the market shrank.
And April’s record price came despite a sudden 30 percent increase in new listings.
In rural areas, the picture isn’t much better: The average price across the state rose 10 percent over the past year to $610,000.
Home prices in Detroit have doubled in just five years, data from real estate marketplace Point2 showed last month.
Home prices in Miami and Tampa, Florida have doubled since 2018, as have Baltimore, Maryland and Spokane, Washington.
And buyers in Irvine, California β the most expensive housing market in the study β have seen median home prices double from an already steep $750,000 to $1.5 million in just seven years.
The surge in demand has increased the total value of the U.S. housing stock by $2 trillion in the past year alone.
βWe’re stuck in a strange situation where prices are rising,β said Boston University economist Adam Guren.
‘I don’t really see an end to this until there is much more stock on the market. And I don’t see any new inventory coming anytime soon because of the construction costs.β
A Realtor.com report last month noted signs that the housing market gridlock was finally easing, with a 12 percent increase in the number of homes for sale by April 2023, with Southern states accounting for more than half for their account.
Mentions rose 18.4 percent in the Midwest and 7.5 percent in the West, but only 2.9 percent in the Northeast, where fears are growing of a population exodus and erosion of local communities as young people move elsewhere looking for affordable houses.
Even this one-story house in Boston’s leafy suburb of Brook Farm will cost you nearly $800,000 after appraising at less than $600,000 last year
In the fifteen years to 2022, more than 22,000 people between the ages of 25 and 44 have left Massachusetts.
βIt’s certainly a sobering statistic,β Schuster said.
βI don’t think the importance of solving this problem, and solving it quickly and efficiently, can be overstated,β he added.
βThese are trends that will take a long time to reverse, and the health of our region and the people who live in it is at stake.β